European Central Bank policymakers are reportedly increasingly divided in response to the measures that need to be taken to drive the economy during the second wave of Covid-19. The dispute has affected the agreement reached between ECB President Christine Lagarde and 8 ECB members.
Lagarde has managed to end a dispute that caused the ECB to become a mess in the last month during Mario Draghi's administration last year. Lagarde has also successfully announced several stimulus packages to ensure the economy continues to survive amid pandemic contagion.
Tensions escalated when there was a surge in Covid-19 positive infection cases forcing the ECB to announce more stimulus packages. Several issues have also arisen which have led economic chief Philip Lane to get criticism from various quarters.
Policymakers in the ‘hawkish’ camp argue that the ECB underestimates some positive economic indicators. They also called on the ECB to reduce bond purchases to suit market conditions. On the contrary, those in the ‘dovish’ camp are urging Lagarde to take stronger action in line with the risk of growth and the threat of strengthening the euro against the US dollar.
There are those who argue that the economic outlook is too pessimistic as the ECB fails to handle the announced fiscal stimulus measures, which will result in impaired growth and higher inflation. The market is now keeping a close eye on developments.
